U.S.

Alarm's Failure Left Many In Dark

August 20, 2003 / 7:17 AM EDT / CBS/AP

A low-tech telephone hot line network — and the way it was used — didn't do enough to send out warnings of problems on the electric power grid before the nation's worst blackout, power officials and politicians said.

Warnings came too late, or not all, over the system of phones put in place to disseminate information between regional power groups to avert just such a crisis, officials said Monday.

Failures in Ohio transmission lines prompted at least three conversations last Thursday between FirstEnergy Corp., the utility that owns them, and the industry group that manages transmission across much of the Midwest, said Mary Lynn Webster, a spokeswoman for the Midwest Independent Transmission System Operator.

Those electricity transmission line failures, which began around 3:06 p.m. EDT, are a focus of the investigation and suspected in the blackout's possible starting point.

In the latest developments:

The New York City Comptroller's office estimates the cost of the blackout at over $1 billion — $800 million in lost economic activity and $250 million in frozen foods and perishable items that had to be discarded.

FirstEnergy, with 4.3 million customers in Ohio, Pennsylvania and New Jersey, was the subject of a lawsuit filed in Cleveland on Monday by a law firm claiming to represent all 50 million companies and individuals who lost power in the blackout.

A FirstEnergy generator along Lake Erie that was knocked offline may have been the first sign of serious problems that escalated into last week's epic blackout. But federal investigators and energy regulators have prematurely blamed FirstEnergy as the source of the outage, a congressman said Monday.

President Bush said Tuesday that based on his talks with key members of Congress, he believes final work on the national energy bill he wants can begin within about 20 days, reports CBS News White House Correspondent Mark Knoller.

In order to upgrade the nation's power grid to prevent blackouts like last week's, experts say utilities will need to be allowed to charge more for power. And that could mean greater government intervention in the market.

Environmentalists in the United States and Canada fear last week's blackout will provide potent ammunition for the politicians and business groups seeking massive investments in new power plants and transmission lines.

While thousands of businesses suffered during the outage, entrepreneurs hawking blackout souvenirs were quick to power up their pitches. Blackout merchandise started popping up on the Internet within hours of the outage, offering everything from mugs with a list of all the affected cities, to tote bags with a tasteful black-and-white design — "Blackout 2003" along with Thursday's date.

Many individual utility companies said they had little or no indication of problems in the system before their own facilities shut down.

"The first indication that we had was when we started to see our transmission lines trip out," said Ralph LaRossa, vice president of electric delivery for New Jersey's PSE&G.

The failure of the alarm system is just one aspect of the massive power outage that investigators and policymakers will examine. There's already been heated debate over where the problem started.

FirstEnergy spokesman Todd Schneider added that it was "unfair to point the finger" during the preliminary stages of the blackout investigation. "We came out early and said there were some issues with our system. We don't think they caused it."

On Sunday, FirstEnergy officials said the Midwest power network recorded numerous voltage swings that stressed its system as early as midday Thursday, hours before high-voltage lines failed south of Cleveland.

The shutdown of generator No. 5 at FirstEnergy Corp.'s Eastlake Power Plant might be the first manifestation of the blackout — but probably not the cause, Rep. Steven LaTourette, R-Ohio, told reporters Monday.

Looking beyond the immediate cause of the blackout, energy experts say the way government regulates power will have to change.

Currently, utilities get a federally guaranteed rate of return of about 10 percent; in order for them to charge more for transmission costs, though, state regulators will need to approve higher retail rates.

Utilities have been reluctant to spend money on adding to or upgrading their systems in recent years because higher returns on their investment had been available in unregulated businesses such as power generation and trading.

Over the past decade, utilities spent billions on building new power plants, an area of the business that delivered hefty profits (at least until the sagging economy and an eventual oversupply caused electricity prices to fall and their profits to plummet.) That left the country with ample juice, but an inadequate delivery system.

The immediate policy push — if the blackout indeed is blamed on problems with the distribution grid — is likely to be for improved transmission lines.

Many environmentalists agree that transmission systems need improvement, but fear the blackout will provide impetus for a component of the Bush administration energy policy envisioning widespread construction of new power plants.

"There's a better way," said Debbie Boger, a Sierra Club energy expert in Washington. "The best way to prevent energy bottlenecks and grid overload is to increase the efficiency of our buildings, homes, factories and appliances, in addition to our transmission lines."

However, Gavin Donohue, executive director of the Independent Power Producers of New York, said environmentalists should accept the fact that expanded transmission and generating facilities also are needed.

"This blackout covered 9,300 square miles and affected 50 million people," Donohue said. "Renewable energy and conservation are an important part of the solution, but it's laughable to say they could have made up the difference of what occurred here."

Another possible solution is the introduction of devices that can prevent peak power demand from crippling a power grid. Bob Chiste, CEO of Comverge, told CBS News Correspondent Steve Dunlop that air conditioning alone can make up fifty percent of a household's - and by extrapolation, the nation's - power usage on a warm day.

"There are systems because of technology that exists today… where a cycling switch can be installed on air conditioners" which can alleviate the sudden surge in demand by staggering air conditioner cycling. Such a change would affect home air temperature by an almost imperceptible degree or two.